Question

*1) Which of the following is true of responsibility accounting?*

A) It is a system that measures the plans, budgets, actions, and actual results of a responsibility center.
B) It is an arrangement of lines of responsibility and authority within a responsibility center.
C) It explicitly incorporates continuous improvement and changes due to learning curve.
D) It examines how a result will change if the original plan is not achieved.
Objective 6.5

Answer 1

The true statement about responsibility accounting is that it measures the plans, budgets, actions, and actual results of a responsibility center. Managers of responsibility centers are accountable for their financial performance against budgets or plans.

Step-by-step explanation:

The question pertains to responsibility accounting, which is a part of managerial accounting that involves accumulating and reporting costs and revenues on the basis of the manager who has the authority to make the day-to-day decisions about the items. The correct answer to the question is A) It is a system that measures the plans, budgets, actions, and actual results of a responsibility center. This means that in responsibility accounting, different segments or areas of the business are treated as separate entities (known as responsibility centers), with their managers being held accountable for the financial performance relative to the budgets or plans.

Responsibility in a workplace context generally entails being accountable for your actions and their outcomes. If a manager sets expectations for an employee's performance, they are obligated to meet those expectations. Similarly, when a person makes a significant decision, like starting a business, they must accept the associated risks and outcomes, which is a principle that also underpins responsibility accounting.